Not Necessarily Unfair to Reply on Patent Owner’s Submissions in Obviousness Finding, but Board Failed to Provide Adequate Explanation

In Rovalma, S.A. v. Bohler-Edelstahl GmbH & Co., KG, [2016-2233] (May 11, 2017), the Federal Circuit vacated the Board’s Final Written Decision in IPR2015-00150, finding the Board did not set forth its reasoning in sufficient detail to determine whether the Board’s decision was substantively supported and procedurally proper, and remanded the case.

Bohler petitioned for Inter Partes Review of all four claims of U.S. Patent No. 8,557,056, arguing that the claims should be construed to cover the specific chemical compositions described in the specification, regardless of whether they were created according to the recited process steps. Rovalma successfully argued that the claims should be construed to require the process steps, but the Board then used Rovalma’s evidence of enablement to find the claims obvious.

The Federal Circuit noted the importance of clarity with respect to obviousness determinations, and noted that it has repeatedly insisted on explanations in reviewing the adequacy of the Board’s analysis — both as a matter of obviousness law and as a matter of administrative law. However, the Federal Circuit found that the Board did not sufficiently lay out the basis for its implicit findings regarding several of the process limitations in the claims, noting that the Board simply found that these steps would have been obvious in view of Rovalma’s submissions, with no explanation of the evidentiary basis for those determinations. The Federal Circuit noted that petitioner did not provide any explanation regarding the process claim elements that the Board could adopt as its own. The Federal Circuit also found that the Board did not adequately explain what would motivate a person of ordinary skill to make the modifications. Finally, the Federal Circuit found that Board did not adequately explain why a person of ordinary skill in the art would have reasonably expected success.

The Federal Circuit rejected Rovalma’s argument that the Board was precluded from relying on a patent owner’s submissions in determining that the claims, as construed by Patent Owner, would have been obvious over the Petitioner-asserted prior art. The Federal Circuit said that this took the rule of Magnum Oil Tools too far. Magnum Oil Tools rejected the PTO’s position that the Board is free to adopt arguments on behalf of petitioners that could have been, but were not, raised by the petitioner during an IPR, and simply required the Board to base its decision on arguments that were advanced by a party, and to which the opposing party was given a chance to respond.” This does not preclude the Board from using submissions of the Patent Owner to support invalidity arguments of which Patent Owner adequate notice and opportunity to be heard.

The Federal Circuit suggested that a Petitioner may commit forfeiture when it receives notice of the Patent Owner’s claim construction (in the Patent Owners’ response) and chooses not to present a case for unpatentability under that construction when it had the opportunity, in its Reply.

As to Rovalma’s challenge that it was not given notice and an opportunity to respond, the Federal Circuit said that because it could not sufficiently determine which inferences the Board drew from Rovalma’s submissions, it would not decide whether the Board violated Rovalma’s procedural rights. The Federal Circuit said that to make that decision, it would need to be able to determine what evidence the Board relied on to support its implicit factual findings, how the Board interpreted that evidence, and what inferences the Board drew from it.